Result
Effective annual return
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This calculation is for informational purposes only and does not replace advice from a qualified professional. Formulas and rates may not fit your exact situation — double-check the figures before making decisions.
How it is calculated
Total return = (ending value ÷ starting value − 1) × 100%. Effective annual return = ((ending value ÷ starting value)^(12 ÷ months) − 1) × 100% — the same idea as CAGR, but for any holding period in months, not just whole years.
Annualizing is what makes it possible to compare investments with different holding periods on equal footing: a 15% return over 18 months and a 15% return over six months are very different in effectiveness, and only annualizing makes them comparable.
The calculation assumes a single entry and a single exit, with no contributions or withdrawals in between. If there were additional contributions during the period, the effective return computed this way will be distorted — an accurate estimate in that case needs a more elaborate method, such as an internal rate of return over all the cash flows.